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Investors cautious amid turmoil Central bank moves cheer markets
(20 minutes later)
Markets regained some poise in Thursday trading, cheered by news that six of the world's top central banks have taken steps to calm credit markets.Markets regained some poise in Thursday trading, cheered by news that six of the world's top central banks have taken steps to calm credit markets.
The banks will release $180bn (£99bn) to lift the amount of credit available.
European stocks edged higher as Lloyds TSB's takeover of UK lender HBOS also dispelled some of the gloom hanging over the financial world.European stocks edged higher as Lloyds TSB's takeover of UK lender HBOS also dispelled some of the gloom hanging over the financial world.
London's FTSE 100 index rose along with German and French markets. But markets are expected to stay volatile on fears that more firms could succumb to the financial crisis.
But trade is expected to stay volatile as fears linger that more firms could succumb to the financial crisis. The past few days have seen a number of dramatic developments on financial markets. Thursday's key events include:
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  • Central banks from UK, US, Europe, Canada, Switzerland and Japan will release the $180bn into their money markets. The move is the fourth such concerted effort since the onset of the credit crisis last year.
  • The news helped to reduce the interest rate at which banks lend to each other - a key factor behind the problems in credit markets.
  • Cautious investors are looking for safer places to put their money. The price of gold, regarded as a haven in troubled times, rose to $871.2 an ounce after recording its biggest one-day gain in history on Wednesday.
  • Lloyds TSB released details of its £12.2bn takeover of HBOS. The deals values HBOS shares at 232p each, is expected to lead to cost savings of £1bn a year and could also result in significant job losses.
The past few days have seen a number of dramatic developments on financial markets. Thursday's key events include:
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  • Central banks in the UK, US, Europe and several other countries are pumping billions of dollars of extra funds into money markets to lift the amount of credit available. The move is the fourth such concerted effort since the onset of the credit crisis last year.
  • The news helped the dollar, which had fallen this week against the euro and the yen, and it also cut the interest rate at which banks lend to each other - a key factor behind the problems in credit markets.
  • Cautious investors are looking for safer places to put their money. The price of gold, regarded as a haven in troubled times, rose to $871.2 an ounce after recording its biggest one-day gain in history on Wednesday.
  • Lloyds TSB released details of its £12.2bn takeover of HBOS. The deals values HBOS shares at 232p each, is expected to lead to cost savings of £1bn a year and could also result in significant job losses.
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  • Russia's main stock exchange suspended trading for a second consecutive day as the government tried halt a sharp fall in share prices and restore confidence in the economy.
  • Oil prices fell to $96 a barrel on fears that the deepening financial crisis will hurt the wider economy and dampen demand for crude.
class="bodl" href="#graph">How big are these companies?
  • Russia's main stock exchange suspended trading for a second consecutive day as the government tried halt a sharp fall in share prices and restore confidence in the economy.
  • Oil prices fell to $96 a barrel on fears that the deepening financial crisis will hurt the wider economy and dampen demand for crude.
    • Banks take actionBanks take action
    The action taken by the central banks will see the US Federal Reserve inject a further $180bn (£99bn) into the money markets. The Bank of England is releasing $40bn, while the European Central Bank is to provide a further $55bn. The credit crunch is creating a new world order in banking and finance Robert Peston, BBC business editor class="" href="/1/hi/business/7622893.stm">Read Robert's blog The action taken by the central banks helped to boost confidence on European stock markets although analysts doubted it would have a long-term impact.
    The news helped to boost confidence on European stock markets although analysts doubted it would have a long-term impact. The credit crunch is creating a new world order in banking and finance Robert Peston, BBC business editor class="" href="/1/hi/business/7622893.stm">Read Robert's blog class="" href="/1/hi/business/7622526.stm">Central banks release more funds
    "Markets know that central banks don't own a magic bullet, otherwise they would have used it already," Sean Callow, currency strategist at investment firm Westpac."Markets know that central banks don't own a magic bullet, otherwise they would have used it already," Sean Callow, currency strategist at investment firm Westpac.
    "And we've seen these sorts of steps before; it only addresses one of the symptoms of the underlying crisis.""And we've seen these sorts of steps before; it only addresses one of the symptoms of the underlying crisis."
    In morning trade, the FTSE 100 index was up 59 points at 4,971.6. Germany's Dax index was up 0.12% and France's Cac 40 was up 0.24%. In lunchtime trading, the FTSE 100 index was up 78 points, or 1.6%, at 4,990.8. Germany's Dax index was up 1.26% and France's Cac 40 was up 0.97%.
    In Asia, Hong Kong ended flat at 17,632.5 after earlier falling by 7% as fears of more company failures gripped investors.In Asia, Hong Kong ended flat at 17,632.5 after earlier falling by 7% as fears of more company failures gripped investors.
    Tokyo's Nikkei share index ended 2% lower. Share indexes in Shanghai, Taiwan and India fell by between 3 and 5%.Tokyo's Nikkei share index ended 2% lower. Share indexes in Shanghai, Taiwan and India fell by between 3 and 5%.
    On Wednesday, the Dow Jones index of leading US stocks fell by more than 4%.On Wednesday, the Dow Jones index of leading US stocks fell by more than 4%.
    Market turmoilMarket turmoil
    Markets have been on a white-knuckle ride this week, with the collapse of 150-year old investment bank Lehman Brothers quickly followed by a government rescue of US insurance giant AIG.Markets have been on a white-knuckle ride this week, with the collapse of 150-year old investment bank Lehman Brothers quickly followed by a government rescue of US insurance giant AIG.
    Another investment bank, Merrill Lynch, has been taken over by Bank of America.Another investment bank, Merrill Lynch, has been taken over by Bank of America.
    There has also been feverish speculation about the future of two other leading US banks - Morgan Stanley and Washington Mutual.There has also been feverish speculation about the future of two other leading US banks - Morgan Stanley and Washington Mutual.
    The BBC's business editor Robert Peston said that even Goldman Sachs, the pre-eminent investment bank cannot be confident it can thrive and survive as an independent.The BBC's business editor Robert Peston said that even Goldman Sachs, the pre-eminent investment bank cannot be confident it can thrive and survive as an independent.
    "The credit crunch is creating a new world order in banking and finance," he said."The credit crunch is creating a new world order in banking and finance," he said.
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